IEJ Sovereign Debt Working Paper Series #2
Authors: Fadhel Kaboub and Andrés Chiriboga
Sovereign debt crises in the Global South are not isolated economic mishaps — they are structural features of a global economic system rooted in colonial legacies and sustained through dependency. This working paper from the Institute for Economic Justice (IEJ) challenges the narrative that current debt restructuring mechanisms, like the G20’s Common Framework or the Debt Service Suspension Initiative, can solve the crisis. These initiatives fail to address the structural roots of indebtedness, treating it as a liquidity problem rather than a deeper issue of trade imbalances, resource extraction, and economic subordination.
Debt, the paper argues, is a tool of neocolonial control — used by creditor nations and international financial institutions to keep the Global South locked into roles of resource extraction and low-value production. From Haiti’s independence debt to the modern debt burdens across Africa, Latin America, and Southeast Asia, sovereign debt has maintained economic hierarchies established during colonialism.
The paper proposes the formation of a Global South Debtors’ Coalition — a transformative platform for coordinated negotiation and collective economic planning. Learning from past coordination efforts like the Cartagena Initiative, it outlines strategies for building effective and lasting debtor alliances.
Central to this framework are three interlinked priorities: food sovereignty, energy independence, and industrial policy. The paper calls for strategic regional investments that can break the cycle of dependency and unlock long-term development.
A bold proposal — the “Bargain of the Century” — suggests leveraging the Global South’s collective market size, natural resources, and labour force to demand fairer trade, technology transfers, and investment. With South Africa holding the G20 Presidency and the FfD4 approaching, there is a real opportunity to push for a new, just, and multipolar international economic order.
This paper is a call to action: for debt justice, economic sovereignty, and a transformation agenda rooted in equity and sustainability.